What is the difference between legal and beneficial ownership? How are the different forms of ownership taxed? 

  • All types of property may be 'owned' in two forms: legal ownership and beneficial ownership.
  • The legal owner of property is the person in whose name the property is registered.
  • The beneficial owner is the person who is entitled to receive income or gains deriving from the property.
  • The same person may be both the legal owner and the beneficial owner of the property.
  • The legal owner and beneficial owner may differ, for example, a trustee (the legal owner) may hold property for a beneficiary of a trust (the beneficial owner).

Joint ownership

  • The same person may hold both legal title and beneficial ownership and all property may be also held jointly.
  • Joint property owners, other than married couples or civil partners, are taxed according to their beneficial interest in any property.
  • Joint interests in land and property may be held as 'joint property' or 'tenants in common'.
  • The different forms of land and property joint ownership have different treatment in respect of probate, this may affect Inheritance Tax (IHT) payable.
  • See Joint Property: Legal v beneficial ownership

Married couples etc

Married couples and civil partners are taxed by default 50:50 on income from property held in joint names regardless of their beneficial interests, although there are some specific rules for certain assets.

  • If they hold unequal beneficial interests in a jointly-held property they are required to make an election if they wish to be taxed on the share of income to which they are beneficially entitled.
  • There are some limited exceptions to these rules where no election is required if there is evidence of a different balance in beneficial ownership. 
  • See Joint Property Elections (married couples etc)

Trusts and estates

  • A person who holds legal title to property may not always have a beneficial interest in the property, for example, in the case of a Trust. The trustees of a trust hold legal title on behalf of the beneficiaries.
  • Different beneficiaries may also have variable beneficial interests in the trust property. 
  • Nearly all trusts, with an exception of bare trusts must register for tax and account for tax on trust income and gains, see Trust Tax Registration Service.
  • The beneficiaries of a trust are taxed according to their interest in the trust and the type of trust.
  • See Trusts & Tax planning

Transfer of ownership

  • The beneficial owner of property may transfer all or a proportion ownership by making a declaration of trust in favour of another person.
  • Changes in ownership of land and property should be notified to the Land Registry and must be evidenced in writing.
  • For changes in beneficial ownership by married couples etc. for tax, a joint property election is required (as above).


  • The settlement provisions are a set of anti-avoidance rules designed to stop individuals from avoiding tax by artificially diverting their income to other family members in order to take advantage of their unused tax allowances.
  • See Settlement Provisions

Useful guides on this topic

Joint property: Legal v beneficial ownership 
What is the difference between legal and beneficial ownership? What are the tax consequences? Are the rules different for married couples?

Joint property elections
When property is held in joint names it is taxed according to beneficial ownership. There is an exception where married couples and civil partnerships hold joint property.

UK Trusts
What is a trust? What types of trust are there? How are UK trusts taxed?

Trusts: Tax Planning
How can trusts be used in tax planning? What are the advantages and what are the pitfalls?

Settlement provisions
What are the settlement anti-avoidance rules? How do these rules catch some common family tax planning? What are the rules for spouses and other family members?


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